MIGENIX Reports First Quarter Fiscal 2009 Financial Results

    VANCOUVER, Sept. 15 /CNW/ - MIGENIX Inc. (the "Company" or "MIGENIX")
(TSX: MGI; OTC: MGIFF), a clinical-stage developer of drugs for infectious
diseases, reports financial results for the three months ended July 31, 2008
and provides a corporate update on its programs and other matters.


    Omiganan 1% gel (Omigard(TM)/CPI-226/MX-226; topical cationic peptide;
prevention of catheter-related infections): Cadence Pharmaceuticals, Inc.
("Cadence"), our development and commercialization partner, has today
announced that it is engaged in discussions with the US Food and Drug
Administration ("FDA") regarding the statistical analysis plan for the Central
Line Infection Reduction Study ("CLIRS") Phase III trial and that these
discussions, which are being conducted under a Special Protocol Assessment,
must be completed prior to unblinding the data from the trial. As a result,
Cadence revised its guidance for reporting the results of the CLIRS trial from
the fourth quarter of calendar 2008 to the first quarter of calendar 2009.
With positive results in the CLIRS trial, Cadence continues to expect to
submit a New Drug Application ("NDA") for OmigardTM to the FDA in the second
quarter of calendar 2009. Upon successful completion of various milestones in
this program (starting with FDA acceptance of the NDA for filing), we can
receive up to US$27MM in development and commercialization milestone payments
and a double-digit royalty on net sales. Cadence's commercialization focus is
on the United States market and thus Cadence intends to establish a strategic
partnership(s) for the commercialization of Omigard(TM) for the rights it has
outside of the United States. Our management and Board are working to
out- license Omigard(TM) rights that lie outside of the Cadence agreement
either in combination with Cadence's rights outside the US to prospective
global partners or to potential regional partners for rest of world
territories. We expect a license agreement or agreements with up-front
payment(s), milestones and royalty terms to be completed after positive CLIRS
trial results.

    Omiganan (CLS001; topical cationic peptide; treatment of dermatological
diseases): Cutanea Life Sciences ("Cutanea"), our development and
commercialization partner for CLS001, is preparing to initiate its Phase III
clinical program. As part of its plan to submit a NDA in 2011, Cutanea

    -   in the first quarter of calendar 2009, to initiate chronic toxicology
        studies, specifically the required dermal carcinogenicity study,
        which Cutanea expects will be the rate limiting activity for
        submission of the NDA; and
    -   in the second half of calendar 2009, to initiate its Phase III
        clinical study program (previously Cutanea was targeting the end of

    Celgosivir (MX-3253; oral alpha-glucosidase I inhibitor; treatment of
chronic hepatitis C virus infections): Following the report of interim results
from a Phase II viral kinetics study of hepatitis C virus treatment-naive
patients in July 2008, we are continuing to seek strategic options for
advancing the development of celgosivir and are currently in key partnering

    MX-2401 (IV lipopeptide; treatment of gram-positive bacterial
infections): MX-2401, an injectable lipopeptide, is being developed for the
treatment of serious gram positive bacterial infections, including highly
publicized treatment resistant hospital bacteria such as MRSA. We expect
MX- 2401 to be our next clinical candidate as it represents a highly
competitive intravenous agent for treating serious infections caused by
drug-resistant bacteria for which there are currently very few effective
solutions. With a view to our current financial resources, the focus of
activities in this program is to increase the level of business development
and scientific publication initiatives, including creating greater awareness
of MX-240-1 at the important Interscience Conference on Antimicrobial Agents
and Chemotherapy ("ICAAC") to be held October 25-28, 2008 in Washington, D.C.,
as well as key development activities to support the program. Development
activities in the MX-2401 program will be based on available resources and
completion of an evaluation of the program and resource requirements by
management and our Board. Manufacturing process development at a
European-based contract manufacturer was initiated during the quarter and
other work related to the manufacturing process has been successfully
completed. At this time, we are unable to provide guidance as to the timing
for advancing this program to clinical trials.

    MX-4565 (small molecule; treatment of neurodegenerative diseases): The
potential for a second year of funding from the Michael J. Fox Foundation
("MJFF") to fund research in our MX-4565 program is under review by MJFF. Our
agreement with the MJFF provides us a relationship with Elan Pharmaceuticals
("Elan") whereby Elan has a limited right to license the technology arising
from the MJFF project from us for certain uses in the field of human disease.

    Other Matters: As previously announced in August 2008, we reached an
agreement with DJohnson Holdings Inc. ("DJohnson"), a significant shareholder
of our Company, which avoided a proxy contest at our annual meeting of
shareholders scheduled for October 31, 2008. As part of the agreement, we
reduced the size of our Board from seven members to five and restructured the
Board with three new directors, namely Douglas Johnson, Bruce Schmidt and
Andrew Rae. Two members of the incumbent Board, Pieter Dorsman and Alistair
Duncan, stayed on as directors of our Company. Bruce Schmidt was also
appointed our interim President and CEO. The new Board has instructed
management to concentrate its efforts on restructuring and stabilizing our
operations and to make preparations to raise additional capital to finance our
Company. Further, management has been evaluating our programs, personnel and
business strategies, and is currently working to reduce our financial
commitments and, where necessary, rationalize certain programs though
controlled spending and increased out-licensing efforts.
    As previously announced, we plan to raise up to $2.5 million pursuant to
a rights offering. Additional information concerning the rights offering will
be provided by us in a forthcoming communication.


    For the three months ended July 31, 2008 ("Q1/09"), MIGENIX incurred a
loss of $2.6 million (Q1/08: $3.1 million) or $0.03 (Q1/08: $0.03) per common
share. The $0.5 million decrease in the Q1/09 loss compared to the Q1/08 loss
is principally attributable to a $0.7 million decrease in research and
development expenses, which was partially offset by a $0.2 million increase in
accretion expense and a $0.1 million decrease in interest income. The
accretion expense is a non-cash expense resulting from accreting the liability
component of the convertible royalty participation units and amortizing the
related deferred financing costs.
    As of July 31, 2008, the Company had cash, cash equivalents and
short- term investments of $3.6 million (April 30, 2008: $5.6 million) and the
Company's net working capital was $3.3 million (April 30, 2008: $5.0 million).
The $1.7 million decrease in net working capital from April 30, 2008 is
primarily attributable to the $1.7 million in expenses for the three months
ended July 31, 2008 that do not require the use of cash (i.e. non-cash
expenses include:: amortization, stock-based compensation, deferred share unit
compensation and the accretion of the convertible royalty participation
    MIGENIX believes that its funds on hand at July 31, 2008 and $0.5 million
in funds received in August 2008 from the July 31, 2008 government assistance
receivable (see balance sheet), combined with ongoing cost reduction measures,
are sufficient to provide for operations to approximately the end of calendar
2008 before funds received, if any, from existing or new license agreements,
the exercise of warrants and options, and a planned rights offering in the
aggregate amount up to $2.5 million.

    Outstanding Shares

    There are currently 94,463,806 (July 31, 2008: 94,463,806) common shares
outstanding; 29,465 convertible royalty participation units (July 31, 2008:
29,465); and 5,250,000 (July 31, 2008: 5,250,000) preferred shares
outstanding. During Q1/09, warrants to acquire 7,552,592 common shares expired
unexercised at exercise prices ranging from $0.45 to $0.55.

    Selected Financial Highlights

    BALANCE SHEETS                                      July 31,    April 30,
    Unaudited - In Thousands of Canadian dollars           2008         2008
    Cash and cash equivalents                         $   3,638    $   2,621
    Short-term investments                                    -        2,997
    Other current assets                                  1,340        1,327
    Total current assets                              $   4,978    $   6,945
    Long-term investments                                     1            1
    Property & equipment                                    905          977
    Intangible assets                                       514          544
    Total assets                                      $   6,398    $   8,467

    Liabilities and Shareholders' (Deficiency) Equity
    Accounts payable and accrued liabilities          $   1,659    $   1,901
    Total current liabilities                         $   1,659    $   1,901
    Convertible royalty participation units               6,821        6,247
    Preferred shares                                          -            -
    Total liabilities                                 $   8,480    $   8,148

    Shareholders' (deficiency) equity
    Common shares                                     $ 125,156    $ 125,156
    Equity portion of convertible royalty
     participation units                                  4,554        4,554
    Contributed surplus                                   8,334        8,091
    Deficit                                            (140,126)    (137,482)
    Total shareholders' (deficiency) equity           $  (2,082)   $     319
    Total liabilities and shareholders'
     (deficiency) equity                              $   6,398    $   8,467

    AND DEFICIT                                          Three months ended
    Unaudited - In Thousands of Canadian dollars               July 31,
    (except per share amounts)                             2008         2007
      Research and development collaboration                  -            6
                                                      $       -    $       6
      Research and development                            1,050        1,703
      General and corporate                                 949          987
      Amortization                                          109          137
                                                      $   2,108    $   2,827

    Loss before other income (expense)                $  (2,108)   $  (2,821)
      Accretion of convertible royalty participation
       units and amortization of transaction costs         (574)        (421)
      Interest income                                        37          143
      Foreign exchange gain (loss)                            1           (1)
    Loss and comprehensive loss for the period        $  (2,644)   $  (3,100)
    Deficit, beginning of period                       (137,482)    (124,717)
    Deficit, end of period                            $(140,126)   $(127,817)

    Basic and diluted loss per common share           $   (0.03)   $   (0.03)
    Weighted avg. common shares outstanding (000's)      94,464       94,464

    STATEMENTS OF CASH FLOWS                             Three months ended
    Unaudited - In Thousands of Canadian dollars               July 31,
                                                           2008         2007
    Loss for the period                               $  (2,644)   $  (3,100)
    Items not affecting cash:
      Amortization                                          109          137
      Stock-based compensation                              181          133
      Deferred share units compensation                      62            -
      Accretion of convertible royalty participation
       units and amortization of transaction costs          574          421
      Changes in non-cash working capital items
       relating to operating activities                    (236)         (13)
    Cash used in operating activities                 $  (1,954)   $  (2,422)

    Proceeds on exercise of warrants                          -           36
    Cash provided by financing activities             $       -    $      36

    Funds from (purchases of) short-term investments      2,975        6,880
    Proceeds on disposal of equipment                         -           12
    Purchases of property and equipment                      (4)         (75)
    Cash provided by investing activities             $   2,971    $   6,817

    Increase in cash and cash equivalents             $   1,017    $   4,431
    Cash and cash equivalents, beginning of period        2,621        2,945
    Cash and cash equivalents, end of period          $   3,638    $   7,376

    About MIGENIX

    MIGENIX is committed to advancing therapy, improving health, and
enriching life by developing and commercializing drugs primarily in the area
of infectious diseases. The Company's programs include drug candidates for:
the prevention of catheter-related infections (Phase III), the treatment of
dermatological diseases (end of Phase II), the treatment of chronic hepatitis
C infections (Phase II and preclinical), the treatment of serious gram
positive bacterial infections (preclinical) and the treatment of hepatitis B
infections (preclinical). MIGENIX is headquartered in Vancouver, British
Columbia, Canada. Additional information can be found at www.migenix.com.


    This news release contains forward-looking statements within the meaning
of the United States Private Securities Litigation Reform Act of 1995, and
forward-looking information within the meaning of applicable securities laws
in Canada (collectively referred to as "forward-looking statements").
Statements, other than statements of historical fact, are forward-looking
statements. By their nature, forward-looking statements involve numerous
assumptions, known and unknown risks and uncertainties, both general and
specific, that contribute to the possibility that the predictions, forecasts,
projections and other matters contemplated by the forward-looking statements
will not occur.
    Although our management believes that the expectations represented by
such forward-looking statements are reasonable, there is significant risk that
the forward-looking statements may not be achieved, and the underlying
assumptions thereto will not prove to be accurate. Forward-looking statements
in this news release include, but are not limited to, statements concerning
our expectations for: raising up to $2.5 million through a rights offering;
Cadence Pharmaceuticals having top-line results of the OmigardTM Phase III
CLIRS trial in the first quarter of calendar 2009 and if the results of this
trial are positive, Cadence submitting a new drug application (NDA) for
OmigardTM in the second quarter of calendar 2009; completing rest of world
partnership(s) for OmigardTM after positive OmigardTM CLIRS study results;
Cutanea Life Sciences' plans to submit a NDA in 2011 including initiating
chronic toxicology studies in the first quarter of calendar 2009 and advancing
omiganan for the treatment of rosacea into Phase III clinical development in
the second half of calendar 2009; MX-2401 being our next clinical program and
our plans to continue key development activities to support the MX-2401
program; receiving up to US$27 million in milestone payments pursuant to our
agreements with Cadence; continuing to pursue a partner for the further
development of celgosivir; and the Company's financial resources being
sufficient to fund operations to approximately the end of calendar 2008.
    With respect to the forward-looking statements contained in this news
release, we have made numerous assumptions regarding, among other things: our
ability to complete a rights offering; the adequacy of the OmigardTM Phase III
trial design to generate data that are deemed sufficient by regulatory
authorities to support potential regulatory filings, including an NDA, for
OmigardTM; Cutanea's ability to manage, fund and advance omiganan for
dermatological applications into Phase III and submit a NDA; our ability to
manage licensing opportunities; and future expense levels being within our
current expectations.
    Actual results or events could differ materially from the plans,
intentions and expectations expressed or implied in any forward-looking
statements, including the underlying assumptions thereto, as a result of
numerous risks, uncertainties and other factors including: market conditions
for financings including the Company's planned rights offering; dependence on
corporate collaborations; potential delays; uncertainties related to early
stage of technology and product development; uncertainties as to the
requirement that a drug be found to be safe and effective after extensive
clinical trials and the possibility that the results of such trials, if
completed, will not establish the safety or efficacy of our products;
uncertainties as to future expense levels and the possibility of unanticipated
costs or expenses or cost overruns; the possibility that opportunities will
arise that require more cash than presently anticipated and other
uncertainties related to predictions of future cash requirements; and other
risks and uncertainties which may not be described herein. Certain of these
factors and other factors are described in detail in the Company's Annual
Information Form and other filings with the Canadian securities regulatory
authorities and the U.S. Securities & Exchange Commission.
    Forward-looking statements are based on our current expectations and
MIGENIX assumes no obligations to update such information to reflect later
events or developments.

For further information:

For further information: Bruce Schmidt, president and chief executive
officer, at (604) 221-9666

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